DoD's $14.9M engineering services contract awarded to Chugach Technical Solutions raises questions about value and competition

Contract Overview

Contract Amount: $14,943,563 ($14.9M)

Contractor: Chugach Technical Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-16

End Date: 2026-09-27

Contract Duration: 1,107 days

Daily Burn Rate: $13.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LABOR

Place of Performance

Location: CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29406

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $14.9 million to CHUGACH TECHNICAL SOLUTIONS LLC for work described as: LABOR Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 2. Limited competition raises concerns about potential overpayment and reduced price discovery. 3. The duration of the contract (over 3 years) suggests a significant, ongoing need for these services. 4. Awarding to a single vendor without full and open competition warrants scrutiny of the justification. 5. The lack of a specific Product Service Code (PSC) makes direct benchmarking difficult. 6. Performance context is limited due to the 'NOT AVAILABLE FOR COMPETITION' status.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, can lead to higher costs if not managed tightly. Without clear performance metrics or a competitive bidding process to establish a baseline, it's difficult to assess if the fixed fee represents fair value for the engineering services provided. Benchmarking against similar CPFF contracts for engineering services within the Department of Defense would be necessary to determine if the overall cost is reasonable. The absence of a specific PSC code further complicates direct cost comparisons.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' (NAF) basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the agency's needs, or in specific circumstances like follow-on work to a previous contract where only one vendor has the necessary knowledge or proprietary information. The limited competition significantly reduces the opportunity for price negotiation and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards limit taxpayer value by preventing the government from benefiting from competitive pricing. This can result in higher overall spending for the same services compared to a competed contract.

Public Impact

The Department of the Navy benefits from specialized engineering services to support its operations. The contract likely supports critical infrastructure or program development within the Navy. The geographic impact is centered in South Carolina, where the contract is managed or services are performed. The contract supports a workforce skilled in engineering and technical services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee structure can incentivize higher spending if not closely monitored.
Limited transparency due to sole-source award hinders public accountability.
Absence of a specific PSC code makes independent cost analysis challenging.

Positive Signals

Award to an established entity (Chugach Technical Solutions) suggests potential for reliable service delivery.
The contract duration indicates a sustained need and potential for long-term partnership.
The fixed fee component provides some level of cost predictability within the CPFF structure.

Sector Analysis

Engineering services are a critical component of the defense sector, encompassing design, development, and technical support for military systems and infrastructure. The market for these services is substantial, with significant government spending allocated annually. This contract fits within the broader category of professional services supporting defense readiness. Comparable spending benchmarks are difficult to establish without a specific PSC, but the overall defense engineering services market is valued in the tens of billions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award, there are no subcontracting requirements specified for small businesses. This means the contract does not directly contribute to the government's small business contracting goals and may not provide opportunities for small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract's terms and conditions, including performance standards and reporting requirements. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services
Navy Professional Services Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award lacks competitive pricing.
CPFF structure requires diligent cost oversight.
Limited transparency in procurement process.
Potential for reduced innovation due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.9 million to CHUGACH TECHNICAL SOLUTIONS LLC. LABOR

Who is the contractor on this award?

The obligated recipient is CHUGACH TECHNICAL SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $14.9 million.

What is the period of performance?

Start: 2023-09-16. End: 2026-09-27.

What is the track record of Chugach Technical Solutions with the Department of Defense?

Chugach Technical Solutions LLC has a history of contracting with the Department of Defense. While specific details of past performance on this particular type of engineering service are not provided in the summary data, their presence as a contractor suggests they have met certain requirements to be awarded federal contracts. A deeper dive into their contract history, including past performance reviews and any reported issues, would be necessary to fully assess their track record. This would involve examining databases like the Federal Procurement Data System (FPDS) for previous awards, task orders, and any associated performance feedback or disputes.

How does the $14.9 million value compare to similar engineering services contracts within the Navy?

Comparing the $14.9 million value requires context regarding the scope and duration of the services. Engineering services contracts can vary widely in price depending on complexity, duration, and specific technical requirements. Without a specific Product Service Code (PSC) or a detailed statement of work, it's challenging to find directly comparable contracts. However, the Department of the Navy awards numerous engineering services contracts annually, ranging from small, specialized task orders to large, multi-year programs. A value of $14.9 million over approximately three years (based on the award and estimated end dates) suggests a significant, ongoing requirement, but its reasonableness can only be assessed against contracts with similar objectives and service levels.

What are the primary risks associated with a sole-source award for engineering services?

The primary risks associated with a sole-source award for engineering services include a lack of price competition, which can lead to higher costs for the government and taxpayers. Without multiple bidders vying for the contract, the government loses the opportunity to negotiate the best possible price. There's also a risk of reduced innovation and service quality, as the incumbent contractor may face less pressure to improve or offer competitive solutions. Furthermore, sole-source awards can raise concerns about fairness and transparency in the procurement process, potentially limiting opportunities for other qualified businesses. The justification for a sole-source award must be robust to ensure it's truly necessary and in the government's best interest.

How effective is the Cost Plus Fixed Fee (CPFF) contract type for managing engineering services in defense?

The Cost Plus Fixed Fee (CPFF) contract type is often used for engineering services when the scope of work is not precisely defined at the outset or involves significant research and development. Its effectiveness lies in allowing flexibility while providing some cost control through the fixed fee. The government pays the actual allowable costs incurred by the contractor, plus a predetermined fixed fee representing profit. While this structure can accommodate uncertainties, its effectiveness hinges on robust government oversight to ensure costs are reasonable and allocable, and that the fixed fee adequately compensates the contractor for the effort without being excessive. Poor oversight can lead to cost overruns and reduced value for money.

What is the historical spending trend for engineering services by the Department of the Navy?

The Department of the Navy consistently spends billions of dollars annually on engineering services, reflecting the vast and complex nature of its operations, research, and development activities. This spending encompasses a wide range of services, from naval architecture and marine engineering to systems engineering and infrastructure design. Historical data shows a steady demand for these services, often driven by shipbuilding programs, modernization efforts, and maintenance requirements. While specific figures fluctuate year-to-year based on budgetary allocations and program priorities, engineering services represent a significant and enduring category of expenditure for the Navy.

What does the 'NOT AVAILABLE FOR COMPETITION' status imply about the procurement process?

The 'NOT AVAILABLE FOR COMPETITION' (NAF) status, often synonymous with sole-source or limited competition, implies that the agency has determined that full and open competition is not feasible or practicable for this specific procurement. This determination typically requires a formal justification, such as the existence of only one responsible source capable of providing the required services, or specific circumstances like urgent and compelling needs where competition would cause unacceptable delays. It signifies that the standard competitive bidding process was bypassed, raising the importance of the justification's validity and the agency's due diligence in ensuring the award is in the government's best interest.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6523621R0040

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3800 CENTERPOINT DR STE 1200, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $15,037,229

Exercised Options: $15,037,229

Current Obligation: $14,943,563

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6523621D8009

IDV Type: IDC

Timeline